"What are we to do, then?" he demanded. "To destroy the trusts is the only way we can see to escape their domination."

Ernest was all fire and aliveness on the instant.

"I'll show you another way!" he cried. "Let us not destroy those wonderful machines that produce efficiently and cheaply. Let us control them. Let us profit by their efficiency and cheapness. Let us run them for ourselves. Let us oust the present owners of the wonderful machines, and let us own the wonderful machines ourselves. That, gentlemen, is socialism, a greater combination than the trusts, a greater economic and social combination than any that has as yet appeared on the planet. It is in line with evolution. We meet combination with greater combination. It is the winning side. Come on over with us socialists and play on the winning side."

Here arose dissent. There was a shaking of heads, and mutterings arose.

"All right, then, you prefer to be anachronisms," Ernest laughed. "You prefer to play atavistic roles. You are doomed to perish as all atavisms perish. Have you ever asked what will happen to you when greater combinations than even the present trusts arise? Have you ever considered where you will stand when the great trusts themselves combine into the combination of combinations--into the social, economic, and political trust?"

He turned abruptly and irrelevantly upon Mr. Calvin.

"Tell me," Ernest said, "if this is not true. You are compelled to form a new political party because the old parties are in the hands of the trusts. The chief obstacle to your Grange propaganda is the trusts. Behind every obstacle you encounter, every blow that smites you, every defeat that you receive, is the hand of the trusts. Is this not so? Tell me."

Mr. Calvin sat in uncomfortable silence.

"Go ahead," Ernest encouraged.

"It is true," Mr. Calvin confessed. "We captured the state legislature of Oregon and put through splendid protective legislation, and it was vetoed by the governor, who was a creature of the trusts. We elected a governor of Colorado, and the legislature refused to permit him to take office. Twice we have pa.s.sed a national income tax, and each time the supreme court smashed it as unconst.i.tutional. The courts are in the hands of the trusts. We, the people, do not pay our judges sufficiently. But there will come a time--"

"When the combination of the trusts will control all legislation, when the combination of the trusts will itself be the government," Ernest interrupted.

"Never! never!" were the cries that arose. Everybody was excited and belligerent.

"Tell me," Ernest demanded, "what will you do when such a time comes?"

"We will rise in our strength!" Mr. Asmunsen cried, and many voices backed his decision.

"That will be civil war," Ernest warned them.

"So be it, civil war," was Mr. Asmunsen's answer, with the cries of all the men at the table behind him. "We have not forgotten the deeds of our forefathers. For our liberties we are ready to fight and die."

Ernest smiled.

"Do not forget," he said, "that we had tacitly agreed that liberty in your case, gentlemen, means liberty to squeeze profits out of others."

The table was angry, now, fighting angry; but Ernest controlled the tumult and made himself heard.

"One more question. When you rise in your strength, remember, the reason for your rising will be that the government is in the hands of the trusts. Therefore, against your strength the government will turn the regular army, the navy, the militia, the police--in short, the whole organized war machinery of the United States. Where will your strength be then?"

Dismay sat on their faces, and before they could recover, Ernest struck again.

"Do you remember, not so long ago, when our regular army was only fifty thousand? Year by year it has been increased until to-day it is three hundred thousand."

Again he struck.

"Nor is that all. While you diligently pursued that favorite phantom of yours, called profits, and moralized about that favorite fetich of yours, called compet.i.tion, even greater and more direful things have been accomplished by combination. There is the militia."

"It is our strength!" cried Mr. Kowalt. "With it we would repel the invasion of the regular army."

"You would go into the militia yourself," was Ernest's retort, "and be sent to Maine, or Florida, or the Philippines, or anywhere else, to drown in blood your own comrades civil-warring for their liberties. While from Kansas, or Wisconsin, or any other state, your own comrades would go into the militia and come here to California to drown in blood your own civil-warring."

Now they were really shocked, and they sat wordless, until Mr. Owen murmured: "We would not go into the militia. That would settle it. We would not be so foolish."

Ernest laughed outright.

"You do not understand the combination that has been effected. You could not help yourself. You would be drafted into the militia."

"There is such a thing as civil law," Mr. Owen insisted.

"Not when the government suspends civil law. In that day when you speak of rising in your strength, your strength would be turned against yourself. Into the militia you would go, w.i.l.l.y-nilly. Habeas corpus, I heard some one mutter just now. Instead of habeas corpus you would get post mortems. If you refused to go into the militia, or to obey after you were in, you would be tried by drumhead court martial and shot down like dogs. It is the law."

"It is not the law!" Mr. Calvin a.s.serted positively. "There is no such law. Young man, you have dreamed all this. Why, you spoke of sending the militia to the Philippines. That is unconst.i.tutional. The Const.i.tution especially states that the militia cannot be sent out of the country."

"What's the Const.i.tution got to do with it?" Ernest demanded. "The courts interpret the Const.i.tution, and the courts, as Mr. Asmunsen agreed, are the creatures of the trusts. Besides, it is as I have said, the law. It has been the law for years, for nine years, gentlemen."

"That we can be drafted into the militia?" Mr. Calvin asked incredulously. "That they can shoot us by drumhead court martial if we refuse?"

"Yes," Ernest answered, "precisely that."

"How is it that we have never heard of this law?" my father asked, and I could see that it was likewise new to him.

"For two reasons," Ernest said. "First, there has been no need to enforce it. If there had, you'd have heard of it soon enough. And secondly, the law was rushed through Congress and the Senate secretly, with practically no discussion. Of course, the newspapers made no mention of it. But we socialists knew about it. We published it in our papers. But you never read our papers."

"I still insist you are dreaming," Mr. Calvin said stubbornly. "The country would never have permitted it."

"But the country did permit it," Ernest replied. "And as for my dreaming--" he put his hand in his pocket and drew out a small pamphlet--"tell me if this looks like dream-stuff."

He opened it and began to read: "'Section One, be it enacted, and so forth and so forth, that the militia shall consist of every able-bodied male citizen of the respective states, territories, and District of Columbia, who is more than eighteen and less than forty-five years of age.'

"'Section Seven, that any officer or enlisted man'--remember Section One, gentlemen, you are all enlisted men--"that any enlisted man of the militia who shall refuse or neglect to present himself to such mustering officer upon being called forth as herein prescribed, shall be subject to trial by court martial, and shall be punished as such court martial shall direct.'

"'Section Eight, that courts martial, for the trial of officers or men of the militia, shall be composed of militia officers only.'

"'Section Nine, that the militia, when called into the actual service of the United States, shall be subject to the same rules and articles of war as the regular troops of the United States.'

"There you are gentlemen, American citizens, and fellow-militiamen. Nine years ago we socialists thought that law was aimed against labor. But it would seem that it was aimed against you, too. Congressman Wiley, in the brief discussion that was permitted, said that the bill 'provided for a reserve force to take the mob by the throat'--you're the mob, gentlemen--'and protect at all hazards life, liberty, and property.' And in the time to come, when you rise in your strength, remember that you will be rising against the property of the trusts, and the liberty of the trusts, according to the law, to squeeze you. Your teeth are pulled, gentlemen. Your claws are trimmed. In the day you rise in your strength, toothless and clawless, you will be as harmless as any army of clams."

"I don't believe it!" Kowalt cried. "There is no such law. It is a canard got up by you socialists."

"This bill was introduced in the House of Representatives on July 30, 1902," was the reply. "It was introduced by Representative d.i.c.k of Ohio. It was rushed through. It was pa.s.sed unanimously by the Senate on January 14, 1903. And just seven days afterward was approved by the President of the United States."*

* Everhard was right in the essential particulars, though his date of the introduction of the bill is in error. The bill was introduced on June 30, and not on July 30. The Congressional Record is here in Ardis, and a reference to it shows mention of the bill on the following dates: June 30, December 9, 15, 16, and 17, 1902, and January 7 and 14, 1903. The ignorance evidenced by the business men at the dinner was nothing unusual. Very few people knew of the existence of this law. E. Untermann, a revolutionist, in July, 1903, published a pamphlet at Girard, Kansas, on the "Militia Bill." This pamphlet had a small circulation among workingmen; but already had the segregation of cla.s.ses proceeded so far, that the members of the middle cla.s.s never heard of the pamphlet at all, and so remained in ignorance of the law.

CHAPTER IX.

THE MATHEMATICS OF A DREAM.

In the midst of the consternation his revelation had produced, Ernest began again to speak.

"You have said, a dozen of you to-night, that socialism is impossible. You have a.s.serted the impossible, now let me demonstrate the inevitable. Not only is it inevitable that you small capitalists shall pa.s.s away, but it is inevitable that the large capitalists, and the trusts also, shall pa.s.s away. Remember, the tide of evolution never flows backward. It flows on and on, and it flows from compet.i.tion to combination, and from little combination to large combination, and from large combination to colossal combination, and it flows on to socialism, which is the most colossal combination of all.

"You tell me that I dream. Very good. I'll give you the mathematics of my dream; and here, in advance, I challenge you to show that my mathematics are wrong. I shall develop the inevitability of the breakdown of the capitalist system, and I shall demonstrate mathematically why it must break down. Here goes, and bear with me if at first I seem irrelevant.

"Let us, first of all, investigate a particular industrial process, and whenever I state something with which you disagree, please interrupt me. Here is a shoe factory. This factory takes leather and makes it into shoes. Here is one hundred dollars' worth of leather. It goes through the factory and comes out in the form of shoes, worth, let us say, two hundred dollars. What has happened? One hundred dollars has been added to the value of the leather. How was it added? Let us see.

"Capital and labor added this value of one hundred dollars. Capital furnished the factory, the machines, and paid all the expenses. Labor furnished labor. By the joint effort of capital and labor one hundred dollars of value was added. Are you all agreed so far?"

Heads nodded around the table in affirmation.

"Labor and capital having produced this one hundred dollars, now proceed to divide it. The statistics of this division are fractional; so let us, for the sake of convenience, make them roughly approximate. Capital takes fifty dollars as its share, and labor gets in wages fifty dollars as its share. We will not enter into the squabbling over the division.* No matter how much squabbling takes place, in one percentage or another the division is arranged. And take notice here, that what is true of this particular industrial process is true of all industrial processes. Am I right?"

* Everhard here clearly develops the cause of all the labor troubles of that time. In the division of the joint-product, capital wanted all it could get, and labor wanted all it could get. This quarrel over the division was irreconcilable. So long as the system of capitalistic production existed, labor and capital continued to quarrel over the division of the joint-product. It is a ludicrous spectacle to us, but we must not forget that we have seven centuries' advantage over those that lived in that time.

Again the whole table agreed with Ernest.

"Now, suppose labor, having received its fifty dollars, wanted to buy back shoes. It could only buy back fifty dollars' worth. That's clear, isn't it?

"And now we shift from this particular process to the sum total of all industrial processes in the United States, which includes the leather itself, raw material, transportation, selling, everything. We will say, for the sake of round figures, that the total production of wealth in the United States is one year is four billion dollars. Then labor has received in wages, during the same period, two billion dollars. Four billion dollars has been produced. How much of this can labor buy back? Two billions. There is no discussion of this, I am sure. For that matter, my percentages are mild. Because of a thousand capitalistic devices, labor cannot buy back even half of the total product.

"But to return. We will say labor buys back two billions. Then it stands to reason that labor can consume only two billions. There are still two billions to be accounted for, which labor cannot buy back and consume."

"Labor does not consume its two billions, even," Mr. Kowalt spoke up. "If it did, it would not have any deposits in the savings banks."

"Labor's deposits in the savings banks are only a sort of reserve fund that is consumed as fast as it acc.u.mulates. These deposits are saved for old age, for sickness and accident, and for funeral expenses. The savings bank deposit is simply a piece of the loaf put back on the shelf to be eaten next day. No, labor consumes all of the total product that its wages will buy back.

"Two billions are left to capital. After it has paid its expenses, does it consume the remainder? Does capital consume all of its two billions?"

Ernest stopped and put the question point blank to a number of the men. They shook their heads.

"I don't know," one of them frankly said.

"Of course you do," Ernest went on. "Stop and think a moment. If capital consumed its share, the sum total of capital could not increase. It would remain constant. If you will look at the economic history of the United States, you will see that the sum total of capital has continually increased. Therefore capital does not consume its share. Do you remember when England owned so much of our railroad bonds? As the years went by, we bought back those bonds. What does that mean? That part of capital's unconsumed share bought back the bonds. What is the meaning of the fact that to-day the capitalists of the United States own hundreds and hundreds of millions of dollars of Mexican bonds, Russian bonds, Italian bonds, Grecian bonds? The meaning is that those hundreds and hundreds of millions were part of capital's share which capital did not consume. Furthermore, from the very beginning of the capitalist system, capital has never consumed all of its share.

"And now we come to the point. Four billion dollars of wealth is produced in one year in the United States. Labor buys back and consumes two billions. Capital does not consume the remaining two billions. There is a large balance left over unconsumed. What is done with this balance? What can be done with it? Labor cannot consume any of it, for labor has already spent all its wages. Capital will not consume this balance, because, already, according to its nature, it has consumed all it can. And still remains the balance. What can be done with it? What is done with it?"

"It is sold abroad," Mr. Kowalt volunteered.

"The very thing," Ernest agreed. "Because of this balance arises our need for a foreign market. This is sold abroad. It has to be sold abroad. There is no other way of getting rid of it. And that unconsumed surplus, sold abroad, becomes what we call our favorable balance of trade. Are we all agreed so far?"

"Surely it is a waste of time to elaborate these A B C's of commerce," Mr. Calvin said tartly. "We all understand them."

"And it is by these A B C's I have so carefully elaborated that I shall confound you," Ernest retorted. "There's the beauty of it. And I'm going to confound you with them right now. Here goes.

"The United States is a capitalist country that has developed its resources. According to its capitalist system of industry, it has an unconsumed surplus that must be got rid of, and that must be got rid of abroad.* What is true of the United States is true of every other capitalist country with developed resources. Every one of such countries has an unconsumed surplus. Don't forget that they have already traded with one another, and that these surpluses yet remain. Labor in all these countries has spent it wages, and cannot buy any of the surpluses. Capital in all these countries has already consumed all it is able according to its nature. And still remain the surpluses. They cannot dispose of these surpluses to one another. How are they going to get rid of them?"

* Theodore Roosevelt, President of the United States a few years prior to this time, made the following public declaration: "A more liberal and extensive reciprocity in the purchase and sale of commodities is necessary, so that the overproduction of the United States can be satisfactorily disposed of to foreign countries." Of course, this overproduction he mentions was the profits of the capitalist system over and beyond the consuming power of the capitalists. It was at this time that Senator Mark Hanna said: "The production of wealth in the United States is one-third larger annually than its consumption." Also a fellow-Senator, Chauncey Depew, said: "The American people produce annually two billions more wealth than they consume."

"Sell them to countries with undeveloped resources," Mr. Kowalt suggested.

"The very thing. You see, my argument is so clear and simple that in your own minds you carry it on for me. And now for the next step. Suppose the United States disposes of its surplus to a country with undeveloped resources like, say, Brazil. Remember this surplus is over and above trade, which articles of trade have been consumed. What, then, does the United States get in return from Brazil?"

"Gold," said Mr. Kowalt.

"But there is only so much gold, and not much of it, in the world," Ernest objected.

"Gold in the form of securities and bonds and so forth," Mr. Kowalt amended.

"Now you've struck it," Ernest said. "From Brazil the United States, in return for her surplus, gets bonds and securities. And what does that mean? It means that the United States is coming to own railroads in Brazil, factories, mines, and lands in Brazil. And what is the meaning of that in turn?"

Mr. Kowalt pondered and shook his head.

"I'll tell you," Ernest continued. "It means that the resources of Brazil are being developed. And now, the next point. When Brazil, under the capitalist system, has developed her resources, she will herself have an unconsumed surplus. Can she get rid of this surplus to the United States? No, because the United States has herself a surplus. Can the United States do what she previously did--get rid of her surplus to Brazil? No, for Brazil now has a surplus, too.

"What happens? The United States and Brazil must both seek out other countries with undeveloped resources, in order to unload the surpluses on them. But by the very process of unloading the surpluses, the resources of those countries are in turn developed. Soon they have surpluses, and are seeking other countries on which to unload. Now, gentlemen, follow me. The planet is only so large. There are only so many countries in the world. What will happen when every country in the world, down to the smallest and last, with a surplus in its hands, stands confronting every other country with surpluses in their hands?"

He paused and regarded his listeners. The bepuzzlement in their faces was delicious. Also, there was awe in their faces. Out of abstractions Ernest had conjured a vision and made them see it. They were seeing it then, as they sat there, and they were frightened by it.

"We started with A B C, Mr. Calvin," Ernest said slyly. "I have now given you the rest of the alphabet. It is very simple. That is the beauty of it. You surely have the answer forthcoming. What, then, when every country in the world has an unconsumed surplus? Where will your capitalist system be then?"

But Mr. Calvin shook a troubled head. He was obviously questing back through Ernest's reasoning in search of an error.

"Let me briefly go over the ground with you again," Ernest said. "We began with a particular industrial process, the shoe factory. We found that the division of the joint product that took place there was similar to the division that took place in the sum total of all industrial processes. We found that labor could buy back with its wages only so much of the product, and that capital did not consume all of the remainder of the product. We found that when labor had consumed to the full extent of its wages, and when capital had consumed all it wanted, there was still left an unconsumed surplus. We agreed that this surplus could only be disposed of abroad. We agreed, also, that the effect of unloading this surplus on another country would be to develop the resources of that country, and that in a short time that country would have an unconsumed surplus. We extended this process to all the countries on the planet, till every country was producing every year, and every day, an unconsumed surplus, which it could dispose of to no other country. And now I ask you again, what are we going to do with those surpluses?"

Still no one answered.

"Mr. Calvin?" Ernest queried.

"It beats me," Mr. Calvin confessed.

"I never dreamed of such a thing," Mr. Asmunsen said. "And yet it does seem clear as print."

It was the first time I had ever heard Karl Marx's* doctrine of surplus value elaborated, and Ernest had done it so simply that I, too, sat puzzled and dumbfounded.

* Karl Marx--the great intellectual hero of Socialism. A German Jew of the nineteenth century. A contemporary of John Stuart Mill. It seems incredible to us that whole generations should have elapsed after the enunciation of Marx's economic discoveries, in which time he was sneered at by the world's accepted thinkers and scholars. Because of his discoveries he was banished from his native country, and he died an exile in England.

"I'll tell you a way to get rid of the surplus," Ernest said. "Throw it into the sea. Throw every year hundreds of millions of dollars' worth of shoes and wheat and clothing and all the commodities of commerce into the sea. Won't that fix it?"

"It will certainly fix it," Mr. Calvin answered. "But it is absurd for you to talk that way."

Ernest was upon him like a flash.